Whether this is just a 'misunderstanding' or a land-grab to make up for Japan's Senkaku actions, the Indians are claiming that a platoon of Chinese soldiers have crossed the so-called 'Line of Actual Control' in the Indian-held Ladakh region. They have remained there for two weeks and even as India complains, the Chinese deny, saying that they are "firmly opposed to any acts that involve crossing the Line of Actual Control and sabotaging the status quo." Indian officials fear that if they react with force, the face-off could escalate into a battle. But doing nothing would leave a Chinese outpost deep in territory India has ruled since independence. "If they have come 19 kilometers into India, it is not a minor LAC violation. It is a deliberate military operation. And even as India protests, more tents have come up," said one analyst but the Indians are rattling other sabres. China is India's biggest trading partner, with bilateral trade heavily skewed in China's favor, crossing $75 billion in 2011. Politicians are demanding Chinese imports are banned, "the Chinese have to learn that such aggression cannot be delinked from trade." Most are baffled by Beijing's motives, since its actions could force India to move closer to Beijing's biggest rival, the United States; though perhaps bringing that closer is just the point.

Via Yahoo,
The platoon of Chinese soldiers slipped across the boundary into India in the middle of the night, according to Indian officials. They were ferried across the bitterly cold moonscape in Chinese army vehicles, then got out to traverse a dry creek bed with a helicopter hovering overhead for protection.

They finally reached their destination and pitched a tent in the barren Depsang Valley in the Ladakh region, a symbolic claim of sovereignty deep inside Indian-held territory. So stealthy was the operation that India did not discover the incursion until a day later, Indian officials said.

China denies any incursion, but Indian officials say that for two weeks, the soldiers have refused to move back over the so-called Line of Actual Control that divides Indian-ruled territory from Chinese-run land, leaving the government on the verge of a crisis with its powerful northeastern neighbor.

...

"If they have come 19 kilometers into India, it is not a minor LAC violation. It is a deliberate military operation. And even as India protests, more tents have come up," said Sujit Dutta, a China specialist at the Jamia Milia Islamia university in New Delhi.

"Clearly, the Chinese are testing India to see how far they can go," he said.

That is not China's stated view.

Chinese Foreign Ministry spokeswoman Hua Chunying said Thursday that Chinese troops had been carrying out normal patrols and had not crossed the boundary.

"China is firmly opposed to any acts that involve crossing the Line of Actual Control and sabotaging the status quo," she said at a daily briefing in Beijing as she was repeatedly questioned about the dispute.

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Local army commanders from both sides have held three meetings over the crisis, according to Indian officials. India's foreign secretary called in the Chinese ambassador to register a strong protest. Yet the troops did not move, and even pitched a second tent, Indian officials said.

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"China realizes that India has a weak government, and a prime minister who is powerless," said Yashwant Sinha, a former foreign minister from the opposition Bharatiya Janata Party.

He demanded a stronger response. "A bully will back off the moment it realizes that it's dealing with a country which will not submit to its will," Sinha said.

"The Chinese have to learn that such aggression cannot be delinked from trade," Dutta said.

...

Analysts said they were baffled by Beijing's motives, since its actions could force India to move closer to Beijing's biggest rival, the United States.

"The Chinese for some reason don't seem able to see that," said Joshi.

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The stand-off may eventually be resolved diplomatically, "but what it really shows is the PLA's contempt for our military capability," former Indian navy chief Sushil Kumar wrote in The Indian Express newspaper.